All Forum Posts by: Landon Clipp

 Not possible unfortunately. There are no connections out where the house is. I think this experience has led us to make a rule about never buying houses that don't have city septic connections.

Hey folks. Me and my business partner have a SFH with tenants currently occupying it for over a year at this point. We bought the house early last year. The house has a septic drywell and fresh water well, no city connections at all. Recently the tenants were complaining about the water not draining properly so we had a septic company come out and do an inspection. Initially they told us that the house's septic drywell (it's not a leeah field) just needed to be pumped out and it should be fine. So they pumped the septic tank and the drywell. A month later the tenants again claimed the water wasn't draining properly, so the septic company came out again and told us it appeared the septic drywell was totally clogged and not draining properly and needed to be replaced.

We hired an engineer to give us plans on replacing the septic system. He told us that the current septic system and fresh water wells are too close to each other and we would have to replace the fresh water well in addition to the septic. He said all-in-all he estimated the total cost of all replacements to be about $30k.

This is a pretty shocking number to us and we're a bit stuck on what we should do. My business partner wants to sell the house and take the loss but I know that we're going to have to disclose our discovery to the buyers or risk being sued. My thoughts are that we could just eat the $30k now and we'll get it back over the next 10 years or so in revenue and appreciation. 

What would you do in this situation and what do you recommend we should do? Would you sell the house or keep it and do all the repairs?

@Marian Smith real estate in my opinion will never be "normal" in the US. The US's zoning obsession with only single family homes paired with NIMBY-ism and the decrease in available land means that desperately needed multi unit buildings will rarely be favored, thus the forever increasing march towards increased home values will continue unimpeded.

@Anthony Middleton personally I would not even dare to ask such a question. A tenant's familial status is not really a landlord's business, and asking about protected classes even on a public forum is opening one's self up to a discrimination lawsuit.

Like others have said, don't make it an issue until it becomes one. Also, I would recommend against even mentioning the pregnancy to your tenant in any way besides just general well wishes.

I personally would never buy any property with an HOA unless I'm living in it. An HOA is meant to protect, and is usually run by, the owner-occupants. The decisions they make regarding their finances is not necessarily optimized for a real estate investor, meaning you can get recklessly negligent HOAs who don't make necessary repairs (like in the Surfside Condo Greg mentioned) or who are over-zealous in repairing/replacing things that work just fine. Both situations are bad for running a business.

I would tread very carefully. Deciding to by property in an HOA for investing should be the result of seriously exceptional circumstances.

@Landon Bleau and to be clear this is home/hazard insurance not rental insurance

@Landon Bleau nice to meet a fellow Landon. It's not that the policy is specific to student rentals, it's that insurers see student rentals as high risk and thus charge significantly higher premiums. Also seems to not be so common as my broker seemed a little confused on how to handle it.

Hey BP, I have a house that is primarily marketed for student housing next to a major campus in Illinois. I currently have a insurance policy that costs probably twice what a "typical" insurance policy would cost for house. I do expect the insurance to be more expensive due to it being a student rental, however I feel that I can find a better deal elsewhere. Has anyone worked with, or know of a company that will insure student rentals for a good rate?

As everyone has stated, it's purely a matter of personal preference. If you are someone who is extremely averse to dealing with difficult situations, then getting a PM is a good idea. If you are someone who is willing to deal with difficult situations once in a blue moon, I personally feel it isn't worth it to get a PM. 

@Michele Fischer mentioned getting a PM for finding new tenants, but you don't need a PM for this. You can either hire a real estate agent to market, show, and screen tenants for you (usually for 50% of the first month's rent), or just use something like RentPrep to do all credit and background checks and host an open house or two during the weekends. You can pay them an extra $12 for them to follow up on any tenant references.

I view PMs as a way that I can scale my business. Right now I have enough time where I can spare 1-2 hours a month with maintenance issues, calling contractors, and doing my accounting. When I start lacking free time, I'll start delegating to PMs. Once your property is up and running, it really should only be taking 1-2 hours of your time per month on average.

I highly encourage you to simply manage yourself because it gives you lots of excellent experience you'll need if/when you scale your investing larger. It'll save you tons of money too. If you find something taking too much of your time, delegate it, hire it out.

This doesn't happen very often. As long as you know some basics: where is the water main shut off, where is the main circuit breaker, where is the fire extinguisher, you should be okay. Get the number of a handyman willing to field emergency 24/7 calls just in case. If your house is on fire or any serious water related thing is happening, call the fire department. Anything that is not life threatening or property destroying can wait until the morning.

You can hire a real estate attorney to draft all contracts that you have that are specific to your jurisdiction. The leases should be specific and comprehensive enough that if you ever have a question on what you can and cannot do, you just read the lease and it will tell you. If not, call the attorney and ask. Don't need a PM for this. The big thing that screws landlords in my area is not paying the tenant interest on security deposits. Attorneys can tell you all of this. You can also hire attorneys to do the entire eviction process for you, including posting all notices in the correct timeframe and showing up to court to plead your case.

So overall, you should view PMs as people who give you back free time, not necessarily someone who will expertly handle your property (because in many cases, they won't). If 1-2 hours a month of your time is worth 10% of your rent plus all additional related fees, you should do it. Otherwise, don't.

I am looking to purchase a property in the city of North Chicago, IL and am in the market research/serious consideration phase. I have found a few interesting properties on the market that look attractive to me, but I want to get more information on the region. Anyone who is familiar with the area, can you tell me some of your thoughts on North Chicago investing? 

- What are the vacancy rates we're seeing there?
- What are some of the interesting locations that renters find attractive?
- Is there a large or at least present student population with Rosalind Franklin University? If so, how does the university affect the market, and how distant from the campus do students typically rent?
- Does the metra stop affect housing prices/rent compared to other locations in the city?
- What's the prospects for the town? Are people leaving for other cities, or does it have a stable population?

Just curious on any information you can give. All part of my due diligence. Thanks!